Allegheny Technologies (ATI) Announces Next Phase of FRP Streamlining; Will Cut ~33% of Salaried Workforce

Allegheny Technologies Incorporated (NYSE: ATI) announced the next phase in the restructuring of its Flat Rolled Products (FRP) operations with the reduction of approximately one third of FRP’s salaried workforce through the elimination of over 250 positions. This workforce reduction will be completed by the end of the second quarter 2016. As a result of these actions, ATI will record a $9 million severance charge in first quarter 2016 results. These actions are expected to generate annualized cost savings benefits of over $30 million beginning in the third quarter 2016.

“Reducing our flat-rolled products business’ dependence on unprofitable commodity products is a difficult process,” said Rich Harshman, Chairman, President and CEO. “We believe in U.S. manufacturing. However, it is difficult for a U.S.-based company to compete in the global commodity markets, particularly when significant global overcapacity exists for products such as commodity stainless steel sheet and grain-oriented electrical steel (GOES). The restructuring and right-sizing actions we are taking, while painful for our employees and our company, are necessary to help secure the future of ATI Flat Rolled Products.

“We are in the process of creating a smaller, more agile, streamlined, cohesive, and efficient FRP business that will focus on products and markets with significant technical barriers to entry. As previously announced, our Midland, PA stainless steel facility has been idled to reduce our exposure to commodity stainless steel sheet. Our GOES operation will be idled this month. These actions improve ATI’s focus on differentiated flat-rolled products that serve growing global markets. The future restart of the idled operations depends on future business conditions and ATI’s ability to earn an acceptable return on invested capital on products manufactured at these operations.

“The reduction in FRP’s salaried workforce is another step in our journey to return the FRP business to profitability as quickly as possible, and to execute our strategy for sustainable long-term profitable growth. We expect the FRP business to be modestly profitable in the second half of 2016.”

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